In this episode of the MGMA Insights podcast, we’re joined by Tom McDougal
, CEO of Merit Health Biloxi hospital. McDougal is a serial healthcare entrepreneur, author, speaker, professor and thought-leader in healthcare economics.
To learn more about this topic and earn ACMPE, CME and CEU credit, access McDougal’s on-demand webinar, “Using Economic Theory to Understand Patient Decisions,” at mgma.com/economic-theory
Don’t quite have time to listen to the entire episode? No worries. We’ve compiled a handful of highlights from McDougal’s interview for your convenience:
- (11:53) “Oftentimes, people act differently than we would expect them to act from a theory perspective, much like the weather does. I laugh because I look at a seven-day forecast and whatever it says is going to be the general condition seven days from now, I assume it’ll be the opposite. If it says a 50% chance of rain, I assume it’s going to be sunny that day. It’s become kind of an interesting concept to me. But from an economics perspective, we often see people diverge from what we assume as logical action. But to them, it’s very logical.”
- (15:22) “Let’s talk about healthcare economics from the 30,000-foot view first. Healthcare has to be the strangest industry on earth. Let me tell you why I say that, because it’s an industry that relies almost solely on agents making recommendations to customers of where to go purchase the services. … The physician is acting as an agent. Then we make it even more complicated that we have separated the patient from the primary payer mechanism. We have what’s referred to as the third-party payer. … [The patients] are again separated from the economic model, so it becomes this really complicated situation where a lot of providers are at the mercy of the strangest industry on earth because of the way the economics of the industry have been structured. … As a result, we have no choice but to embrace economics, because we have to understand all the factors that are going into this very complex decision process and process for connecting the customer with the provider.’’
- (20:50) “Probably the most common one we talk about is rational choice theory. Rational choice theory says that a patient, or a consumer just in general, is going to make a rational decision each and every time of what to purchase when in their own best interest. So, the key there is that we expect them to always behave rationally, and every time they behave irrationally. And you know like I do, people don’t act that way. Sometimes we do irrational things.”
- (33:03) “It’s not rational. It’s not logical, but it’s happening around us every day, all day, people are making all these decisions. So that’s my point in investing and understanding economics is to try to figure out what is it that makes the decision process change from the way we think it’s going to happen, and if you can anticipate what those changes might be, that’s where you get a competitive advantage.”
Here are some links and references related to this week’s show:
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MGMA Insights is presented by Craig Wiberg, Rob Ketcham, Decklan McGee and Daniel Williams.
To further guide your healthcare career, be sure to check out MGMA’s October Book of the Month, “Navigating to Value-Based Outcomes,” by Thom Walsh. To purchase or preview the book, visit mgma.com/navigating